Siyabonga Hadebe
Pretoria - Last Wednesday, Finance Minister Enoch Godongwana tabled the 2023/24 budget in Parliament.
The speech received mixed reactions from economists, analysts, and political parties. Green politics and its broad impact on the economy have yet to be understood by the public. The engineered crisis at Eskom to assist the mainstreaming of renewables is about to bring municipalities to their knees.
Godongwana proposed a plan to attract businesses and individuals to invest in renewable energy under the pretext that the country has to play a role in adaptation and mitigation as demanded by the Paris Agreement on Climate Change. They will receive tax rebates and other assistance for installing rooftop solar panels. President Cyril Ramaphosa had declared in 2021 that businesses would be allowed to generate power of up to 100 megawatts each without a licence.
But municipalities earn a margin of between 15% and 25% on reselling electricity purchased from Eskom. A city like Tshwane stands to lose billions should big industries like Ford in Silverton and BMW in Rosslyn generate their own electricity.
The country is headed towards hard-rocking economic turbulence as the global financial landscape interplays with geopolitics. The Financial Action Task Force’s (FATF) decision to “greylist” South Africa could impair the economy’s links to the global financial system, raise the cost of capital and create an additional disincentive for offshore companies to deal with the country.
With the new classification, South Africa now enjoys the unlikely company of the likes of Syria, the Democratic Republic of Congo and South Sudan as it prepares to take over the leadership of the G-20 in 2025. This means the country rubs shoulders with the world’s big boys while languishing at the bottom.
In the same week as the budget announcement, Africanews.com reported that Russia, China, and South Africa would conduct joint naval drills off South Africa’s Indian Ocean coast to demonstrate close ties.
Russia has been on the West’s unwanted list since the start of the Ukrainian conflict, and China has a tense relationship with the West. This year, South Africa chairs the BRICS formation and will host both Russia’s Vladimir Putin and Chinese premier Xi Jinping in August in a summit to be held in August.
Republican House Representative John James introduced Resolution HR145 in the US Congress that, among others, opposes South Africa’s hosting of military exercises with China and Russia, and urges the Biden admin to “conduct a thorough review of the US-South Africa relationship” in light of the joint military exercise. It is now referred to the Committee on Foreign Affairs for further processing. Significantly, Resolution HR145 targets South Africa’s inclusion in America’s unilateral trade scheme African Growth and Opportunity Act (Agoa) and the US-South Africa Trade and Investment Framework signed in 2012.
The country is likely to feel the West’s wrath for backing the wrong horse in the ongoing contest between the global powers. However, even if Resolution HR145 fails to stand the test for any reason, South Africa could still be forced into alignment via the US Senate Resolution S.Res.531, which would seek to designate Russia as a State Sponsor of Terrorism. S.Res.531 and the FATF greylisting basically declare South Africa as a new member of the infamous “axis of evil” and a soft target of the US-led violence and economic imperialism.
Overall, Godongwana’s budget did not capture South Africa’s economic survival under the barrage of Western financial imperialism and intensified geopolitical competition. As a result, the West could soon tighten the noose on South Africa and its economy for dancing with Russia and China. The implications could be vast for South Africa. Siya yi banga le economy!
*Hadebe is an independent commentator on socio-economic, political and global matters based in Geneva. The views expressed here are his own.
* *The views expressed do not necessarily reflect the views of IOL or Independent Media.
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